this Consumer Financial Protection Bureau (Consumer Financial Protection Bureau) and freedom mortgage The presiding judge and magistrate each suffered minor setbacks in a case involving widespread irregularities in Home Mortgage Disclosure Act (HMDA) submissions made by the regulator in 2020. National Mortgage News first reported the development.
The original case has been submitted to U.S. District Court for the Southern District of FloridaThe CFPB claims there were “widespread and material errors” in 2020 HMDA data that Freedom submitted to the bureau in early 2021, according to a CFPB statement included in the original complaint reviewed by HousingWire.
The CFPB claimed that when the company resubmitted the data seven months later, “the revised submission that attempted to correct these errors included changes to nearly 20% of all covered loans and more than 174,000 data in dozens of data fields. The entry has been changed.”
The agency also alleges ongoing HMDA violations that include “pervasive deficiencies.” [the lender’s] Policies, procedures and systems for collecting and reporting HMDA data […] Despite knowing that his system was flawed, [failing] Implement appropriate changes.
In December 2023, Freedom filed a motion to dismiss the case on four grounds: the CFPB’s assertions were “baseless” and vague; “HMDA and [its implementing] Regulation C is vague and unconstitutional because they do not establish error rates or accuracy standards to inform agency lenders when their reports are required; “Follow the law” injunction unenforceable; CFPB’s funding structure is unconstitutional, judge says “Fatal to its claims.”
But Judge Donald Middlebrooks refused to dismiss the case, ruling on May 2 that the grounds for dismissal were insufficient. Regarding the possibility that the agency’s funding structure is unconstitutional, Middlebrooks noted that this exact issue is currently before Congress. United States Supreme Court It declined to take a position until the high court is expected to issue its own ruling sometime this year.
The CFPB case has not been smooth sailing. On April 5, District Judge William Matthewman ruled in favor of Liberty, forcing the CFPB to provide “information regarding how the CFPB views the ‘seriousness’ of the violations.” […] and what kind of ‘error’ constitutes a ‘violation’,” the judge said.
The CFPB objected, saying such information would include “data regarding HMDA data submitted by amicus regulatory entities” that is “irrelevant, burdensome and protected by the ‘attorney-client, bank review, enforcement and intentional processing privileges'” ”. As Middlebrooks summed it up.
However, Middlebrooks disagreed with the CFPB, saying the finding was based on proportionality and that “the court’s finding that other agencies’ errors were related to the seriousness of the facts.” [the] The defendant was suspected of illegal conduct. The judge said the CFPB failed to determine why such a request would be burdensome and ruled that the information Freedom sought was not privileged.
Instead, Freedom “is seeking factual information about the number of changes made between HMDA’s submissions and resubmissions and the total number of errors. This information does not involve attorney-client privilege, nor does it involve bank examination, enforcement or intentional procedural privileges,” Because it involves a comparison of data,” Middlebrooks ruled.
As of May 10, no party has responded to the order denying the motion. The case remains open, with a trial scheduled to begin in July.
